Asian spot LNG prices remain at 22-month low on weak demand

LONDON, Apr 30 (Reuters): Asian spot liquefied natural gas (LNG) prices remained at their 22-month lows on Friday, as demand in China, Japan and South Korea was muted, keeping buyers away from spot market and encouraging continuous flows to Europe.
The average LNG price for June delivery into northeast Asia LNG-AS was $11.5 per million British thermal units (mmBtu), down $0.50 or 3.8 per cent from the previous week, industry sources estimated.
"Rates have continued to erode, driven by weak spot demand during a typically less active period. South Asia and the Indian subcontinent are more active, taking advantage of lower numbers and absent contender countries," said Toby Copson, global head of trading at Trident LNG. Forecast of high temperatures across South Asia is expected to shore up demand.
In China, the maximum temperature forecasts for southern China over the coming fortnight are broadly in line with historical norms, suggesting little potential for early summer cooling demand in the region, said Samuel Good, head of LNG pricing at commodity pricing agency Argus.
He added that while South Korean and Japanese forecasts are expected to have slightly above-average temperatures, it is too early for that to translate to a sizeable shift in cooling power demand, especially as both markets continue to hold sizeable LNG stocks and are set to see much more nuclear generation this summer.
In Europe, Argus assessed its daily northwest Europe (NWE) LNG price delivered in June on an ex-ship (DES) basis at $10.55/mmBtu on April 27, a $2.10 discount to the June gas price at the TTF Dutch gas hub.
The front-month gas prices at the Dutch TTF hub continued to ease recently despite last week's below average temperatures that are also set to last for next week.
"These relatively low temperatures will keep gas demand higher than normal, especially with a negative dark spread and a positive spark spread," said Hans Van Cleef, chief energy economist at PZ - Energy Research & Strategy, referring to gas-fired generation being more economic than coal generation.